Last week’s election results were amongst the most unexpected in recent memory. Advance polling had Labour and the Conservatives neck and neck until the very last moment, only for the exit polls to suggest something entirely different: an outright Conservative majority.
As the night wore on, a few things became clear. First, that the Labour Party had performed far worse than predicted. Second, that the Liberal Democrats faced almost total obliteration, and that the Tories had scooped up their vote. Third, that we were witnessing a generational shift in Scotland, with the complete wipeout of Labour north of the border.
Now, with all the votes counted, we know that the Tories just squeaked a majority, and that we will return to single party government, at least in the short term.
So what does this mean for small businesses? Here, we’ve broken down some of the key changes that a Tory government could institute.
The Tories’ hands are tied on tax. In a pledge made on 29 April, the party said that they would not raise income tax, VAT, or National Insurance. These three taxes account for three quarters of the Exchequer’s total tax take, meaning that the government will find it difficult to raise further revenue through tax increases.
In his March Budget, Chancellor George Osborne pledged a “radical” review of the business rates system, but the terms of the review are yet to be set. While the announcement was cautiously welcomed by business leaders, there have been warnings that action is needed urgently in order to make the system fairer for small retailers.
There is speculation that some of the Conservatives’ most controversial policies could now be enacted thanks to their majority. Amongst these is the ‘no fault dismissal’ rule, originally floated in the 2012 Beecroft report, which would allow employers to fire at will and without explanation.
The report, which some commentators said contained the party’s most right-wing employment proposals in decades, also included provision for the reinstatement of the default retirement age, which was scrapped in 2011.
The UK’s membership of the European Union is likely to be one of the thorniest issues for Cameron’s government. The Prime Minister, beholden to his eurosceptic backbench MPs and fighting an attack from UKIP, has pledged an in-out referendum. However, the promise has been met with dismay from many business leaders. In April, meanwhile, a German study suggested that a so-called ‘Brexit’ could cost the UK 14 per cent of its GDP by 2030.
Finally, the Conservatives have long pledged to act on so-called ‘red tape’, and in their manifesto promised to cut £10 billion worth of it in this Parliament. However, there is widespread concern that such a wholesale reduction in regulation could mean that good law, particularly that which is designed to protect workers, could be jettisoned.
Do you think the Conservative government will be good for business? Let us know in the comments.